OCBC beats forecast with 9% rise in Q3 profit to S$1.97 billion

OCBC ’s net profit for the third quarter ended September rose 9 per cent to S$1.97 billion, from S$1.81 billion in the previous corresponding period.

The bank on Friday (Nov 8) said this was underpinned by higher non-interest income and lower allowances.

The earnings beat the S$1.9 billion consensus forecast in a Bloomberg survey of four analysts.

Total income rose 11 per cent year on year to S$3.8 billion from S$3.43 billion, with non-interest income climbing 41 per cent to S$1.37 billion, from S$973 million previously.

The higher non-interest income was led by increases in net fee income, net trading income, as well as insurance income.

Net fee income was up 10 per cent at S$508 million, underpinned by higher wealth management, investment banking and loan-related fees.

Net trading income more than doubled to a new quarterly high of S$508 million; insurance income from the lender’s insurance arm, Great Eastern, rose 6 per cent to S$233 million, buoyed by underlying business performance.

Meanwhile, net interest income for the quarter fell 1 per cent on the year to S$2.43 billion. This came as average assets grew 3 per cent, and net interest margin was down nine basis points (bps) at 2.18 per cent amid higher funding costs.

The bank’s non-performing loans ratio stood at 0.9 per cent, down 0.1 percentage point from the previous year.

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Annualised earnings per share increased to S$1.73 for the quarter, up from S$1.58 a year earlier. Total allowances fell 8 per cent on the year to S$169 million.

Operating expenses were up 9 per cent year on year at S$1.46 billion, driven mainly by higher expenses brought on by increased business volumes, as well as information technology-related costs. Cost-to-income ratio stood at 38.5 per cent, as income growth outpaced higher expenses.

Credit costs for the quarter stood at 22 bps, 5 bps higher than in Q3 FY2023, and 7 bps higher than in Q2 FY2024.

Annualised return on equity inched up 0.1 percentage point on year to 14.1 per cent for the quarter.

Nine-month performance

For the first nine months of the year, net profit rose 9 per cent year on year to S$5.9 billion, surpassing the previous nine-month high reported last year. The lender said this came on the back of broad-based income growth and lower allowances.

Meanwhile, total income was 8 per cent higher at S$11.06 billion, from S$10.23 billion.

As at end-September, customer loans grew 4 per cent on a constant-currency basis to S$305 billion from S$298 billion in the previous corresponding period, driven mainly by corporate loans and mortgages.

The loans-to-deposits ratio stood at 81.6 per cent, from 79.7 per cent the year before.

Group chief executive Helen Wong said: “We will continue to proactively manage our balance sheet to prepare for a lower interest rate environment. We are monitoring potential volatilities arising from uncertain geopolitical conditions.”

She added that the bank is “confident in the resilience and long-term prospects” of its key markets in Asia.

Shares of OCBC closed 3.8 per cent or S$0.58 higher at S$15.88 on Thursday.